Oracle, HP Team on Database Appliance

Oracle, the world's No. 3 software maker is teaming up with Hewlett-Packard to sell powerful, specialized computers that companies use to analyze data on their business activities.

The move, which Oracle Chief Executive Larry Ellison announced on Wednesday, will expand Oracle's footprint in the hardware business and put pressure on smaller players Teradata and Netezza, which specialize in selling those devices, known as data warehouse appliances.

Forrester Research analyst James Kobielus said that the machines are the most powerful data warehouse appliances that Oracle has ever developed. The products will help the company better compete with Teradata, whose machines have been able to crunch more data than ones from Oracle, he said.

"Oracle needed to scale out on the high end," Kobielus said.

But he and some other analysts said that there may not be huge demand for appliances with so much capacity.

"Pretty cool stuff, but it will likely have limited market reach, appeal," said Sageza Group analyst Clay Ryder. "The real question is just how many customers are there for a solution of this scale and performance?"

Kobielus of Forrester Research estimates that Oracle and its rivals sell some $9 billion in data warehousing software, hardware and appliances each year, a market that is growing at an annual clip of about 15 percent. Oracle has the largest share, followed by Teradata, then IBM, he said.

Companies use data warehousing equipment to store and analyze crucial data from customers and transactions.

Phone companies looking to sell existing customers new products might look for clues on possible needs by analyzing call patterns with a data warehouse. Credit card companies store information on transactions, which allows them to quickly review new purchases in a bid to instantly identify fraud.

Charles King, an industry analyst with Pund-IT Research, said that the products announced on Wednesday appeared to be similar to ones developed with Sun that were announced at Oracle's users conference in November 2007.

Hardware appliances account for a relatively small share of revenue at Oracle, the world's largest maker of computer database software. It gets virtually all of its sales from computer programs and related services.

Hewlett-Packard will manufacture the devices and Oracle's salesforce will sell them.

Palo Alto, California-based HP, one of Oracle's closest business partners, ships more servers than any other computer manufacturer.

Netezza Chief Operating Officer Jim Baum said that he is not concerned about Oracle's new product.

"You just can't slap together existing solutions in clever packaging and expect to deliver much faster performance," he said in a statement.